FTR’s Trucking Conditions Index plunged deeper into negative territory in August

FTR’s Trucking Conditions Index fell to -12.54 in August from the July reading of -5.34 due to sharply higher diesel prices and weaker freight volume. August’s TCI implies the toughest overall market conditions for carriers since April 2020, although surges in fuel prices tend to hurt small operations disproportionately as they are less likely to benefit from fuel surcharges. With fuel costs stabilizing for now, the outlook is for improved conditions, but FTR does not expect the TCI to turn consistently positive until late 2024.

Avery Vise, FTR’s vice president of trucking, commented, “Market conditions for trucking companies look solidly negative through the first quarter of next year as we forecast no significant strengthening of capacity utilization or freight rates, and freight demand is stagnant. A major question is whether consumer spending will remain as strong as it has been in the face of inflation, higher financing costs, and the resumption of debt service of student loan payments. Freight demand is more likely to trail our forecast than to exceed it, so any near-term improvements in market conditions for carriers would likely come from a sharp drop in driver capacity. Small carriers continue to exit the market in high numbers, but aside from the LTL sector, larger carriers so far have absorbed much of that capacity. Diesel price volatility and the lack of any near-term strength in spot rates could accelerate carrier failures and tighten capacity.”

Details of the August forecast are found in the October 2023 issue of FTR’s Trucking Update, published on September 30. The October edition includes additional commentary examining the financial situation facing the large number of small carriers currently operating. The Trucking Update includes data and analysis on load volumes, the capacity environment, rates, and the economy.

The TCI tracks the changes representing five major conditions in the U.S. truck market. These conditions are: freight volumes, freight rates, fleet capacity, fuel prices, and financing costs. The individual metrics are combined into a single index indicating the industry’s overall health. A positive score represents good, optimistic conditions. Conversely, a negative score represents bad, pessimistic conditions. Readings near zero are consistent with a neutral operating environment, and double-digit readings in either direction suggest significant operating changes are likely.